Energy Future – 5/31/16

The U.S. Energy Information Administration recently released its International Energy Outlook 2016 (IEO2016) meant to project major changes in energy consumption. For the world’s energy future, the report predicts that world energy consumption will grow by 48% between 2012 and 2040 with non-OECD Asia, including China and India, accounting for more than half of the world’s total increase in energy consumption.

Renewables and nuclear power are forecast to be the fastest-growing energy sources at averages of 2.6% and 2.3% per year respectively through 2040. Natural gas is expected to be the fastest-growing fossil fuel with global consumption increasing by 1.9% per year thanks to supplies of tight gas and shale gas made more accessible by the fracking boom in the U.S.

The report cites concerns about energy security, pollution, climate change, and future high oil prices as reasons for the expanded use of renewable and nuclear power. Another reason they could have included is the falling cost of actual hardware involved in solar and wind power generation as costs have plummeted leading to massive shifts in capital towards renewables.

Screenshot 2016-06-01 at 12.25.21 PM

Or the rise of Tesla as both a purveyor of electric vehicles and relatively cheap energy storage options, both disruptive technologies. In fact, the liquid fossil fuel share of world marketed energy consumption is projected to fall from 33% in 2012 to 30% in 2040 even with the EIA conservatively ignoring new technologies. The EIA likely wanted to avoid addressing the elephant in the room that is electric vehicles. Electric cars will inevitably eat into revenues for oil companies given that a large majority of crude goes to the transportation sector.

rise of electric cars

The world’s slowest-growing energy source is coal. One of the dirtiest and most easily replaced fuels, coal consumption is expected to grow by only 0.6% per year through 2040. China currently consumes almost half of the world’s coal production, but a slowing economy, a shift to a consumer spending economy, air pollution, and commitments to reduce CO2 emissions are listed as reasons why Chinese coal demand will eventually decline.

The IEO2016 was based largely on analysis done before the release of the Clean Power Plan (CPP) which is expected to significant reduce U.S. coal consumption and increases in U.S. renewable consumption compared with the Reference case projection. More information how the CPP could affect U.S. energy consumption can be found in the EIA’s analysis of the preliminary CPP rule.

World energy consumption

Compared to its outlook for the U.S.:

EIA energy projections

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